Employees are the lifeblood of every construction company. Without loyal employees, materials do not get purchased, contractors do not get hired, and buildings do not get built. We also keep hearing that we are experiencing a shortage of skilled trade workers. However, I believe this shortage is not because there are fewer workers, but an overall increase in the volume of construction projects.
Looking at the following chart for non-residential construction spending, you’ll see that spending of private money (non-government projects) is about $60 billion more than the previous peak in 2008-2009.
Looking at the number of construction workers for the same time period shows that there were actually the same number of construction workers in 2018.
To recap the comparison between 2008 & 2018:
- We have added $60 billion worth of construction.
- We have not increased the number of construction workers.
No wonder it feels like we’re experiencing a Construction Labor Shortage!
So, how does the small to mid-size contractor deal with these conditions? You can’t just hire your way out of this problem; there’s not many people looking for work these days.
One of the best strategies for this situation is to build employee loyalty. Typically, employers do just enough to keep the majority of their employees happy. They pay competitive wages, offer decent benefits, and give positive reinforcement.
Here are the results of that type of strategy:
- Each year the average company loses 20-50% of its employee base.
– Bain & Company
- Replacing a lost employee costs 150% of that person’s annual salary
– Columbia University
Because the cost of replacing employees is so high, and the fact that so many continue to leave, companies who can develop a better strategy for employee satisfaction and retention are going to perform better than their competition.
So, what does a better strategy look like?
Research shows that emotionally connected employees are the best employees because they are engaged and productive, and they feel validated and appreciated. As an employer, you need to understand how to emotionally and financially connect your employees to your business. This goes beyond salaries, training, or benefits.
Here are a few strategies that have been proven to connect employees to the performance of their jobs, as well as the company’s performance.
- Give Them a Voice: Engaging employees on the types of projects the company pursues, and the contractors and owners they work with makes the employees feel like their opinion is valued.
- Create a Sense of Family: Treat your employees like you would family members. Talk to them about topics outside of work. Let them know you care about their interests, hobbies, families, etc. Plan ‘Family Days’, company picnics, cookouts and other activities that get their families involved and show that you care about more than just their productivity and contribution to the bottom line.
- Be Generous: Keep in mind that little things can go a long way. Company shirts and hats, new work boots and tools, gift cards, tickets to ball games – all of these are small expenses for the company but can have a major influence on your employees. You don’t have to give them large gifts to make big impressions.
- Offer Recognition: Never miss an opportunity to thank your employees for their hard work, dedication and contributions. People like to be recognized for their efforts, and a pat on the back can be worth more than you suspect. Be public with your recognition when possible; put their picture on the wall as ‘Employee of the Month’, feature them in the company newsletter, announce their accomplishments at the company meeting, let them shine in front of their peers. Look for ways to congratulate entire departments, project teams, and groups of peers when possible.
- Monetary Rewards: I intentionally left this one for last. While most employees will list money as their primary reward or form of recognition, I’ve found that money doesn’t really build loyalty. Workers don’t typically leave a good job for a $1-2/hour raise. They leave because they aren’t happy – they aren’t being treated the way they want, or aren’t being listened too, or don’t like their supervisor.
I have personally quit positions due to disagreements with supervisors and feeling like my contributions were not being listened too, but can’t think of a time when I left for purely financial reasons. Conversely, I have turned down positions that offered an increase in compensation but would have had me working on projects I wasn’t interested in, or for people with management styles (or company philosophies) that didn’t agree with me.
What other strategies have you used to build employee loyalty? We’d love to hear your thoughts and feedback!
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